Fraley v. Chesapeake and Ohio Railway Company, Civ. A. No. 66-415.

Citation294 F. Supp. 1193
Decision Date23 January 1969
Docket NumberCiv. A. No. 66-415.
PartiesCharles M. FRALEY, Plaintiff, v. The CHESAPEAKE AND OHIO RAILWAY COMPANY, Defendant.
CourtUnited States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)

McArdle & McLaughlin, Pittsburgh, Pa., for plaintiff.

Mercer & Buckley, Pittsburgh, Pa., for defendant.


DUMBAULD, District Judge.

The question for decision here is whether, upon the record before us as developed after full opportunity for discovery,1 the activities of the Chesapeake and Ohio Railway Company within the Western District of Pennsylvania are sufficiently substantial and continuous as to constitute "doing business" within the meaning of 45 U.S.C. § 562 so as to justify litigation within said district of a personal injury case arising in another State, and involving a non-resident plaintiff.

The circumstances under which a Court may properly adjudicate lawsuits against a corporation created under the law of a State other than that in which the court sits have long been the subject of extensive judicial discussion and much problematical philosophizing. United States v. Scophony Corp., 333 U.S. 795, 804, 819-820, 68 S.Ct. 855, 92 L.Ed. 1091 (1948).

Thus in the first case in which the name of the writer of this opinion was enshrined in the federal reports, United States v. Aluminum Co. of America, 20 F.Supp. 13, 15-16 (S.D.N.Y.1937), the court dealt with the distinction between "doing business" and "transacting business", the latter term being the criterion embodied in the special venue provision for antitrust cases contained in 15 U.S.C. § 22.3

In connection with research for that case, we recollect reading with fascination the memorable opinion of Judge Learned Hand in Hutchinson v. Chase & Gilbert, 45 F.2d 139, 140-142 (C.C.A. 2, 1930), and attempting to tread in his footsteps from tuft to tuft across the morass of doctrine and decision.

Perhaps there is no better summary of the matter than what he there wrote:

The theory of personal jurisdiction in an action in personam is, ordinarily at any rate, derived from the power over the defendant, consequent upon his presence within the state of the forum. McDonald v. Mabee, 243 U.S. 90, 37 S.Ct. 343, 61 L.Ed. 608, L.R.A.1917F, 458. The service of a capias subjects him de facto to such commands as its courts may utter, though in its stead a notice will usually serve. Such a theory is not really apposite to a corporation, however conceived, and it is only by analogy that it can be used. So long as it was thought of as a fictitious personality, created by the state of its origin, there were logical difficulties—or at least there were thought to be,—in treating it as existent outside the limits of that state. Bank of Augusta v. Earle, 13 Pet. 519, 10 L. Ed. 274. As to jurisdiction, the express consent of a corporation to be sued elsewhere avoided its territorial limitations * * * and * * * this has been extended to cases where the corporate activities within the foreign state are such as empower that state to exact such a consent. * * *

It scarcely advances the argument to say that a corporation must be "present" in the foreign state, if we define that word as demanding such dealings as will subject it to jurisdiction, for then it does no more than put the question to be answered. Indeed, it is doubtful whether it helps much in any event. It is difficult, to us it seems impossible, to impute the idea of locality to a corporation, except by virtue of those acts which realize its purposes. The shareholders, officers and agents are not individually the corporation, and do not carry it with them in all their legal transactions. It is only when engaged upon its affairs that they can be said to represent it, and we can see no qualitative distinction between one part of its doings and another, so they carry out the common plan. If we are to attribute locality to it at all, it must be equally present wherever any part of its work goes on, as much in the little as in the great.

When we say, therefore, that a corporation may be sued only where it is "present", we understand that the word is used, not literally, but as shorthand for something else. It might indeed be argued that it must stand suit upon any controversy arising out of a legal transaction entered into where the suit was brought, but that would impose upon it too severe a burden. On the other hand, it is not plain that it ought not, upon proper notice, to defend suits arising out of foreign transactions, if it conducts a continuous business in the state of the forum. At least, the Court of Appeals of New York seems still to suppose this to be true, in spite of the language in Old Wayne Mut. Life Ass'n v. McDonough, 204 U.S. 8, 27 S.Ct. 236, 51 L.Ed. 345, and Simon v. So. Ry., 236 U.S. 115, 35 S.Ct. 255, 59 L.Ed. 492. Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915. And see Missouri, K. & T. Ry. v. Reynolds, 255 U.S. 565, 41 S.Ct. 446, 65 L.Ed. 788. But a single transaction is certainly not enough, whether a substantial business subjects the corporation to jurisdiction generally, or only as to local transactions. There must be some continuous dealings in the state of the forum; enough to demand a trial away from its home.

This last appears to us to be really the controlling consideration, expressed shortly by the word "presence", but involving an estimate of the inconveniences which would result from requiring it to defend, where it has been sued. We are to inquire whether the extent and continuity of what it has done in the state in question makes it reasonable to bring it before one of its courts. Nor is it anomalous to make the question of jurisdiction depend upon a practical test. This for example is avowedly the case as to corporations engaged in interstate commerce. Davis v. Farmers' Co-operative Equity Co., 262 U.S. 312, 43 S.Ct. 556, 67 L.Ed. 996. No doubt there are governmental reasons for protecting such corporations from local interference; yet, as mere matter of municipal law, the loss and inconvenience to ordinary companies from being sued wherever they may chance to have any dealings whatever, cannot properly be ignored, and may constitute a test of jurisdiction, just as they do of venue, really a kindred matter. If so, it seems to us that nothing is gained by concealing what we do by a word which suggests an inappropriate analogy, that is, the presence of an individual who may be arrested and compelled to obey. This does not indeed avoid the uncertainties, for it is as hard to judge what dealings make it just to subject a foreign corporation to local suit, as to say when it is "present", but at least it puts the real question, and that is something. In its solution we can do no more than follow the decided cases.

Possibly the maintenance of a regular agency for the solicitation of business will serve without more. The answer made in Green v. C., B. & Q. R. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, and People's Tob. Co. v. Amer. Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas.1918C, 537, perhaps becomes somewhat doubtful in the light of International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, and, if it still remains true, it readily yields to slight additions. In Tauza v. Susquehanna Coal Co., supra, there was no more, but the business was continuous and substantial. Purchases, though carried on regularly, are not enough (Rosenberg Co. v. Curtis Brown Co., 260 U.S. 516, 43 S.Ct. 170, 67 L.Ed. 372), nor are the activities of subsidiary corporations (Peterson v. Chicago, R. I. & P. Ry. Co., 205 U.S. 364, 27 S.Ct. 513, 51 L.Ed. 841; Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634), or of connecting carriers (Philadelphia & Read. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710). The maintenance of an office, though always a make-weight, and enough, when accompanied by continuous negotiation, to settle claims (St. Louis S. W. Ry. v. Alexander, 227 U.S. 218, 33 S.Ct. 245, 57 L.Ed. 486), is not of much significance (Davega, Inc., v. Lincoln Furniture Mfg. Co., 29 F. (2d) 164 (C.C.A. 2). It is quite impossible to establish any rule from the decided cases; we must step from tuft to tuft across the morass.

Further elaboration was furnished by Mr. Chief Justice Stone in International Shoe Co. v. State of Washington, 326 U.S. 310, 315-321, 66 S.Ct. 154, 90 L.Ed. 95 (1945), upholding the right of the State of Washington to tax the shoe company's activities in the State and also to subject it to a suit to recover the tax. The demands of due process, he said, may be met by such contacts of a foreign corporation with the forum state as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.4 Stated differently, "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" 326 U.S. at 316, 66 S.Ct. at 158.

Judge Hand regarded the International Shoe test as one of "balancing the conflicting interests", and believed that it served "to center the inquiry upon those practical considerations which count with the parties, and to remove it from that world of abstractions—drawn from the analogy of arrest under a capias —in which it has hitherto so helplessly floundered." Bomze v. Nardis Sportswear, 165 F.2d 33, 37 (C.A. 2, 1948).

In a latter case, Kilpatrick v. Texas & Pacific Ry. Co., 166 F.2d 788 (C.C.A. 2, 1948), Judge Hand more explicitly attributed additional revolutionary scope to the International Shoe case. Plaintiff very properly places great reliance on this opinion of Judge Hand, for he squarely states (166 F.2d at 792) that "the continuous solicitation of...

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